Today’s news in brief-22/09/23
The Co-operative Group (Co-op) has reported £43m in underlying profits for the first half of the year, a notable improvement from the £1m loss in the prior year. This surge is attributed to efficient cost-saving measures, including annualised savings of £101m from 2022, along with further H1 2023 savings. Operational streamlining and previous investments in supply chain infrastructure and IT systems also contributed. Despite economic challenges, Co-op maintained robust sales performance, with revenues at £5.2bn, a slight dip from the previous year due to the sale of its petrol forecourt business.
Frasers has called upon Morgan Stanley’s CEO, James Gorman, to provide evidence for their High Court lawsuit involving an almost £1bn margin call related to trades in Hugo Boss. Frasers alleges that Morgan Stanley acted in bad faith, attempting to compel the retailer to close derivative positions initially established to gain a stake in Hugo Boss. In May 2021, Morgan Stanley imposed a £995m margin call, leading to approximately £43.4m in losses for Frasers. The lawsuit contends that this action was arbitrary, capricious, and in breach of good faith.
The Office for National Statistics (ONS) has reported a 0.4% rise in retail sales in August, following a slight dip of 1.1% in July. Compared to February 2020 pre-COVID levels, total retail sales are 17.3% higher in value but 1.5% lower in volume. Food store sales volumes rebounded by 1.2% in August after a 2.6% fall in July due to dampened clothing and supermarket food sales. Non-food stores also saw a 0.6% increase. However, challenges persist with increased living costs impacting sales volumes, especially in food stores.
Currys is set to create more than 1,100 new roles in anticipation of the peak trading period from Black Friday to January sales. This includes 720 temporary positions in their UK and Republic of Ireland stores, along with permanent roles and van drivers. Successful candidates will start at hourly rates of £10.50 (£11.50 in London). Additionally, permanent colleagues passing a six-month onboarding program may see their minimum hourly rate rise to £10.80 (£11.80 in London). This move comes as Currys raises store colleague pay for the fourth time in 18 months.
Mothercare reported a slip in underlying profits from £12m to £6.7m in the financial year ending March 25. Despite a 9% increase in net worldwide retail sales by franchise partners, net borrowing widened to £12.4m from £9.9m. The retailer expects to complete refinancing discussions soon to secure appropriate financing. In the first half of FY24, franchise partners recorded total retail sales of £132.5m, with challenges persisting in Middle Eastern markets. Mothercare aims to exceed £10m in operating profits, emphasising their transformation towards a global franchising business.
Ocado saw its shares plummet by 20%, marking its most significant drop in 11 years. This drastic fall, triggered by a downgrade from BNP Paribas Exane analyst Andrew Gwynn, resulted in a loss of nearly £1.4bn in the company’s overall value. Gwynn’s downgrade was driven by concerns that the stock’s risk-reward ratio had become imbalanced after a recent surge. Despite this setback, Ocado’s sales rose by 7.2% in Q3, driven by pressure from M&S, a joint venture partner. M&S chairman, Archie Norman, expressed dissatisfaction with Ocado’s performance earlier in the year.
